Accountancy

Accountancy, or accounting, is the production of financial records about an
organization.
[1][2]
Accountancy generally produces financial statements that
show in money terms the economic resources under the control of management;
selecting information that is relevant and representing it faithfully. Accountancy
overlaps heavily with bookkeeping, auditing and taxation.
[3]

Many laborious practices have been simplified with the help of computer
software. Enterprise resource planning (ERP) software provides a
comprehensive, centralized, integrated source of information that companies
can use to manage all major business processes, from purchasing to
manufacturing to human resources. This software can replace up to 200
individual software programs that were previously used. Computer integrated
manufacturing allows products to be made and completely untouched by human
hands and can increase production by having less errors in the manufacturing
process. Computers have reduced the cost of accumulating, storing, and
reporting managerial accounting information and have made it possible to
produce a more detailed account of all data that is entered into any given
system. Computers have changed business to business interaction through e-
commerce. Rather than dealing with multiple companies to purchase products a
business can purchase a product at a less expensive price and take out the third
party and vastly reduces expenses companies once accrued. Inter-organizational
information system enable suppliers and businesses to be connected at all times.
When a company is low on a product the supplier will be notified and fulfill an
order immediately which eliminates the need for someone to do inventory, fill
out the proper documents, send them out and wait for their products.
[4]

Accounting is thousands of years old. Accounting records, which date back
more than 7,000 years, were found in Mesopotamia (Assyrians). The people of
that time relied on primitive accounting methods to record the growth of crops
and herds. Accounting evolved, improving over the years and advancing as
business advanced.
[5]

Early accounts served mainly to assist the memory of the businessperson and
the audience for the account was the proprietor or record keeper alone. Cruder
forms of accounting were inadequate for the problems created by a business
entity involving multiple investors, so double-entry bookkeeping first emerged
in northern Italy in the 14th century, where trading ventures began to require
more capital than a single individual was able to invest. The development of
joint-stock companies created wider audiences for accounts, as investors
without firsthand knowledge of their operations relied on accounts to provide
the requisite information.
[6]
This development resulted in a split of accounting
systems for internal (i.e. management accounting) and external (i.e. financial
accounting) purposes, and subsequently also in accounting and disclosure
regulations and a growing need for independent attestation of external accounts
by auditors.
[7]

Today, accounting is called "the language of business"
[8]
because it is the
vehicle for reporting financial information about a business entity to many
different groups of people. Accounting that concentrates on reporting to people
inside the business entity is called management accounting and is used to
provide information to employees, managers, owner-managers and auditors.
Management accounting is concerned primarily with providing a basis for
making management or operating decisions. Accounting that provides
information to people outside the business entity is called financial accounting
and provides information to present and potential shareholders, creditors such as
banks or vendors, financial analysts, economists, and government agencies.
Because these users have different needs, the presentation of financial accounts
is very structured and subject to many more rules than management accounting.
The body of rules that governs financial accounting in a given jurisdiction is
called Generally Accepted Accounting Principles, or GAAP. Other rules include
International Financial Reporting Standards, or IFRS,
[9]
or US GAAP.

Functions/Objectives/Terms of Reference
To conceive of and suggest areas in which Accounting Standards need to
be developed.
To formulate Accounting Standards with a view to assisting the Council of
the ICAI in evolving and establishing Accounting Standards in India.
To examine how far the relevant International Accounting
Standard/International Financial Reporting Standard can be adapted while
formulating the Accounting Standard and to adapt the same.
To review, at regular intervals, the Accounting Standards from the point of
view of acceptance or changed conditions, and, if necessary, revise the
same.
To provide, from time to time, interpretations and guidance on Accounting
Standards.
To carry out such other functions relating to Accounting Standards.